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BEA Systems' Q3 Sales Lag Analyst Views
Wednesday November 15, 7:00 pm ET
Daniel Del'Re
Shares of business software maker BEA Systems tumbled as much as 9% in late trading Wednesday after the company, as expected, released third-quarter financial data without disclosing earnings, citing its ongoing review of stock-option grants.
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The company, which makes software for Internet and business networks, said sales rose 19% from the year-ago quarter to $348 million. That result tied last quarter for the biggest percentage jump in year-over-year sales in at least three years, but it fell just shy of analysts' views.
BEA (NASDAQ:BEAS - News) forecast revenue of $378million to $392 million this quarter. The midpoint, $385 million, slightly exceeds analysts' $383million estimate.
On Nov. 1, the company said it would have to provide incomplete financial results because of the options investigation. The company hasn't specified the period of time under review or said when the review might be completed.
Hundreds of U.S. companies are being reviewed by the Securities and Exchange Commission, or are doing internal reviews, to see if executives improperly backdated stock options to make more money from those options.
Analysts had expected BEA to post a 27% jump in earnings to 14 cents a share, as sales and profit have risen the last three years.
In a statement, BEA Chief Executive Alfred Chuang attributed the revenue growth to higher sales of products that help companies integrate their information systems. Licensing revenue rose 12% to $136 million. Revenue from services jumped 24% to $211 million.
The company announced 17 new licensing deals above $1 million vs. 19 in the year-ago quarter. New customers include pharmaceutical company Abbott Laboratories (NYSE:ABT - News), credit card company Capital One Financial (NYSE:COF - News) and Deutsche Bank. The total license transaction count rose slightly to 2,460.
The company is benefiting from greater interest in its middleware, software systems used to exchange data between business applications like accounting and billing, says Ken Vollmer, an analyst with Forrester Research. The software lets companies eliminate duplicate systems and save time and costs.
BEA's middleware can use programming code from past applications, so developers aren't forced to generate code from scratch. This has helped some companies shave 60% off the time for development and deploying new applications, according to Forrester. More than 60% of chief information officers recently surveyed by Merrill Lynch called this trend "the next big thing in enterprise software."
BEA also has made a name for itself in business process management, a trend in customizing information systems for particular processes. BPM is gaining traction for compliance activities because it makes systems less vulnerable to manipulation, Vollmer says. Companies can use BPM to comply with Sarbanes-Oxley financial reporting requirements, for example. Forrester expects sales of BPM systems to grow 20% a year through 2009.
Despite that outlook, Vollmer says BEA has encountered "continuing skepticism" from CIOs on the benefits and novelty of BPM.
What's more, a Merrill Lynch survey found that CIOs more often buy middleware from BEA rivals IBM (NYSE:IBM - News) and Oracle (NASDAQ:ORCL - News).
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Re: Taking it down for (Not rated) 52 minutes ago This is all rather humorous. All of the news wire flashes report “analyst” comments that are completely out of line with what the company said on its earnings call yesterday. Company says, revenue strong and getting strong and says it is raising guidance for next quarter. Company says Oracle not even seen in the deals they are working and BEA consistently wins deals away from IBM. News flashes say revenues weak and getting weaker and the company is losing lots of deals (market share) to IBM. Industry Analysts, pretending the rest of the world does not exist, say they looked at / talked to (only) U.S. companies and think CIOs are not sure about BEA products. BEA says it is closing (mega) big deals in China and India and other parts of the world. Looks like the big boys/girls are working a scam to buy up BEAS on the cheap before BEA finishes its options review next month and then closes a big Q4 and then jumps to $20.
Sentiment : Strong Buy
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